Tyson's Super Concrete Inc. v. Court of Appeals

SECOND DIVISION

[G.R. No. 140081. June 23, 2005.]

TYSON'S SUPER CONCRETE, INC.,GREGORIO S. NAVARRO, in his capacity as the Chairman of the Management Committee as created by the Securities and Exchange Commission, GENARO HAO, WILLIAM HAO, NANCY HAO and LYDIA HAO, petitioners,vs.COURT OF APPEALS, HON. PABLO S. INVENTOR, in his capacity as the Presiding Judge of the Regional Trial Court of Kalookan City, Branch 123, HON. BELEN ORTIZ, in her capacity as the Presiding Judge of the Metropolitan Trial Court of Caloocan City, Branch 49, Deputy Sheriff ILDEFONSO CABANG, Metropolitan Trial Court of Kalookan City, Branch 49, and ROMANA DELA CRUZ, respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J p:

Assailed in the petition for review on certiorari before us is the Amended Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 41970, promulgated on May 20, 1999, which reversed its earlier Decision 2 dated February 24, 1997.

The factual and procedural antecedents of the case are as follows:

Romana Dela Cruz is the registered owner of several parcels of land located at P. Dela Cruz St.,Sta. Quiteria, Caloocan City and covered by Transfer Certificates of Title Nos. T-176211, T-176206, T-176207, T-176208, T-176209 and T-176210, all of the Registry of Deeds of Caloocan City.

Sometime in October 1992, Dela Cruz entered into a contract of lease with Tyson's Super Concrete, Inc. (Tyson's for brevity) where it was agreed that the latter shall occupy the property as lessee for a period of twenty (20) years beginning January 1, 1993 until December 31, 2012. 3 Under the contract, the lease payments were graduated and spread over the entire twenty-year period with an initial monthly rental of P36,444.00 per month for the first year to a maximum of P151,529.00 a month for the last year. 4

Subsequently, Tyson's introduced various permanent improvements over the property to be turned over to Dela Cruz after the lapse of the twenty-year period of lease.

Sometime in March 1995, the two major blocs of stockholders of Tyson's comprising of Elsa and Francis Chua, on one hand, and Nancy, William, Genaro and Lydia, all surnamed Hao, on the other, due to internal squabbling, filed a joint motion with the Securities and Exchange Commission (SEC) praying for the appointment of a receiver to oversee the functions of the corporation.

On April 11, 1995, the SEC issued an order creating a Management Committee (Committee, for brevity) to undertake the management of Tyson's, to take custody of and control over all the existing assets, funds and records of the corporation, and to determine the best way to protect the interest of the stockholders and creditors. 5

In an Order dated May 23, 1995, the SEC appointed the following as members of the Committee: Francis Chua, as the representative of their bloc, and Genaro Hao, also as the representative of their group. The accounting firm of Punong Bayan and Araullo was appointed as Chairman of the Committee. 6 In its Order dated July 24, 1995, Nancy Hao was appointed member of the Committee in lieu of Genaro Hao, who refused appointment. 7

On February 27, 1996, a complaint for ejectment was filed by Dela Cruz against Tyson's with the Metropolitan Trial Court (MeTC) of Caloocan City for the alleged failure of Tyson's to pay its rentals despite repeated written demands for such payment. 8 Tyson's failed to file the required answer to the Complaint. TAacHE

On April 22, 1996, the MeTC rendered judgment with the following dispositive portion:

WHEREFORE, Judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering defendant Tyson's Super Concrete, Inc. and all persons claiming right under it:

1) to vacate the leased premises located at N.P. dela Cruz Compound, P. dela Cruz Street, Sta. Quiteria, Caloocan City and to surrender possession peacefully to the plaintiff;

2) to pay plaintiff the amount of P437,388.00 representing its rental arrearages from September to February, 1996 and the amount of P72,388.00 every month thereafter as reasonable compensation for its continued use and occupancy of the leased premises until the same is vacated by it and the possession thereof is restored to the plaintiff;

3) to pay plaintiff the sum of P10,000.00 as and for attorney's fees; and

4) to pay the cost of this suit.

SO ORDERED. 9

On May 24, 1996, Dela Cruz filed a Motion for Immediate Execution of the MeTC judgment. Tyson's, on the other hand, filed a motion praying for the stay of execution of the MeTC decision contending that the MeTC did not acquire jurisdiction over the defendant corporation on the ground that said corporation was not validly and effectively served with summons. On July 22, 1996, Tyson's filed a motion to vacate the judgment of the MeTC. On even date, the MeTC issued an order denying Tyson's motion to vacate judgment. The MeTC made the following findings and conclusion:

The records show that the Contract of Lease over the premises in question was made and entered into by and between plaintiff Romana dela Cruz as Lessor and defendant Tyson's Super Concrete, Inc.,represented by Elsa Hao Chua, Treasurer of the Corporation as authorized by the Board Resolution [as lessee].Defendant has been enjoying the use of the leased premises as its office and place of business by virtue of the said contract since Jan. 1, 1993.

Sheriff Antonio del Rosario of this Court reported that he had exerted efforts on several occasions to serve the summons to any responsible officer of the defendant in their office at the leased premises but to no avail. Upon an information from the defendant's security guard, he was able to locate the spouses Elsa Hao Chua and Francis Chua at their residence at 1231 G. Araneta St.,Tondo, Manila and served the summons on them last March 21, 1996. Elsa Hao Chua is the treasurer of the defendant and its authorized representative as regards the lease contract as aforestated, while her husband Francis Chua is its corporate secretary, and as it turned out a duly appointed member of the Management Committee since May 23, 1995. Receipt of the summons and its annexes was acknowledged by Francis Chua as evidenced by his signature on the file copy of the summons attached to the record of the case.

The Court concedes that there could be some defect in the service of the summons to Francis Chua had it not been shown that the latter is one among the officers of the defendant corporation to whom service of summons may be made pursuant to the aforestated provision in Rule 14 of the Rules of Court. 10

The MeTC Order also directed the issuance of a writ of execution, the judgment having become final and executory. 11

Tyson's then filed with the Regional Trial Court (RTC) of Caloocan City a petition for certiorari and prohibition with application for the issuance of a writ of preliminary injunction and temporary restraining order seeking to stop the judgment of the MeTC. 12

After conducting a summary hearing, the RTC issued a temporary restraining order enjoining the enforcement of the judgment rendered by the MeTC. 13 Thereafter, the RTC received evidence to determine the propriety of the issuance of a writ of preliminary injunction. After hearing, the RTC, per its resolution dated August 26, 1996, denied Tyson's application for the issuance of a writ of preliminary injunction, finding that there is no evidence to warrant the issuance of the said writ. 14

Subsequently, in a Resolution dated September 24, 1996, the RTC dismissed the petition for certiorari and prohibition filed by Tyson's. 15

Tyson's elevated the case to the CA via a special civil action for certiorari. 16

On February 24, 1997, the CA promulgated a decision with the following dispositive portion:

WHEREFORE, the order of default, the judgment by default and the writ of execution issued by respondent Metropolitan Trial Court, Kalookan City, as well as the order of 26 August 1996 issued by respondent Regional Trial Court of Kalookan City, are hereby declared null and void. SHADEC

SO ORDERED. 17

The CA ratiocinated as follows:

The order of the Securities and Exchange Commission is very explicit. The Management Committee was tasked to manage, take custody of and control over all existing assets, funds and records of the corporation, and to determine the best way to protect the interest of the stockholders and creditors of the corporation Tyson's Super Concrete, Inc. Under normal circumstances, summons upon a domestic corporation may be served upon any of the officers enumerated under Section 13, Rule 14 of the Rules of Court. However, since petitioner corporation was undergoing intra-corporate problems which had been taken over by the SEC, under this (sic) special circumstances, summons should "have been effected on the Management Committee created by the SEC and not on any of the officers enumerated under Sec. 13, Rule 14, Rules of Court. Private respondent can neither feign unawareness of the presence of the Management Committee nor can she honestly claim that said 'Management Committee is not the proper entity to receive summons' considering that, upon her motion, respondent Metropolitan Trial Court issued on 4 June 1996 an order directing service of its decision upon the Management Committee. . . .

xxx xxx xxx

The Sheriff's Return clearly and categorically states that summons was received by Francis Chua 'for and in behalf of Elsa Chua who was said to be the treasurer of defendant Tyson's Super Concrete, Inc.' (p. 116, Rollo). The service of summons on Francis Chua who is not among the persons enumerated in Section 13, Rule 14 of the Rules of Court was insufficient. It did not at all bind the petitioner corporation. When the statute designates a particular officer to whom the process may be delivered and with whom it may be left, as service upon the corporation, no other person can be substituted in his place (Delta Motor Sales Corporation v. Mangosing 70 SCRA 598). 18

 

Respondent Dela Cruz filed a motion for reconsideration of the decision of the CA. 19

On May 20, 1999, the CA issued the herein assailed Amended Decision granting the motion for reconsideration, reversing its February 24, 1997 Decision and reinstating the questioned orders of the MeTC and the RTC. 20 It held that:

The adjective rule applicable at the time the subject ejectment case was filed on February 27, 1996 was Section 13, Rule 14 of the Revised Rules of Court, . . .

There is no dispute that Summons for the unlawful detainer case was served upon one Francis Chua, as shown by the Return filed by the Sheriff of the respondent Metropolitan Trial Court on 25 March 1996. Both parties are in agreement that Francis Chua is the corporate secretary of the petitioner corporation, as well as subsequently a member of the Management Committee created by virtue and Order of the Securities and Exchange Commission dated 11 April 1995 in SEC Case No. 03-95-5011 entitled Tyson's Super Concrete Inc.,et. al.,versus William Hao, et. al.

As corporate secretary of the petitioner corporation, Francis Chua is a proper person under the aforementioned Rules to whom service of summons may be validly made. In addition, as member of the Management Committee, he is a responsible officer of the corporation, and may thus be deemed to be an 'agent' thereof, as the term is used in connection with Section 13, Rule 14. ...

xxx xxx xxx

...It is meet to point out that the Management Committee has been invested with all the management prerogatives of petitioner corporation, with the end in view of protecting all the stockholders and creditors thereof, and to that extent has practically supplanted the regular Board of Directors. Hence, a member thereof stands in the place of a director of the corporation, possessed of managerial powers, to borrow the language of the High Court in Villa Rey, supra,'not a lesser officer of the corporation. This was also the rule in the later case of Summit Trading and Development Corp. vs. Avendano, where it was ruled that the secretary of the president of the corporation in that case, is an agent of the corporation under Section 13, Rule 14 of the Rules of Court.

It matters not, as relied upon by petitioners, that a Management Committee was constituted by the Securities and Exchange Commission. For nowhere in the Order creating the said Committee, nor in the language of Presidential Decree No. 92-I (sic),may a construction be supported to the effect that only the Chair of the Management Committee is authorized to receive service of Summons in behalf of the corporation. On the other hand, P.D. 92-A (sic) provides that the Management Committee shall act collectively in running the affairs of the corporation, and implicit therefore it is that a member of the committee thus becomes a responsible officer of the corporation for the purpose of service of Summons. Even granting, arguendo, that the Securities and Exchange Commission, or the Management Committee" itself, has adopted the rule that only the Chair of the Management committee may receive Summons, such internal rule can in no way amend or alter the Rules of Court as promulgated by the Supreme Court, the only Constitutionally-created court, pursuant to its rule-making powers as provided for in Section 5(5), Article VIII of the Fundamental Law. . . . 21

Petitioners filed a Joint Motion for Reconsideration of the Amended Decision 22 but the same was denied in a Resolution issued by the CA on September 20, 1999. 23

Hence, petitioners filed the instant petition raising the following issues:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT FAILED TO DETERMINE THE PRESENCE OF EXTRINSIC FRAUD COMMITTED IN THE INSTANT CASE WHICH DEPRIVED THE PETITIONER CORPORATION OF ITS DAY IN COURT AND/OR DUE PROCESS OF LAW.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT RULED THAT THERE WAS VALID SERVICE OF SUMMONS UPON THE PETITIONER CORPORATION. 24

Prior to delving into the main issues raised in the present case, we deem it proper to discuss collateral issues brought up by petitioners which we find relevant for a proper disposition of herein petition. caAICE

While there may be merit in petitioners' contention that the action for ejectment filed with the MeTC should have been suspended on the ground that the SEC has already created a management committee under P.D. No. 902-A, considering the peculiar circumstances of the case and in the higher interest of substantial justice, we do not find any cogent reason or useful purpose to nullify all the proceedings taken in the courts below and order the suspension of the complaint for ejectment at this stage of the proceedings.

As to petitioners' contention that the MeTC was ousted of its jurisdiction when the SEC created the management committee, settled is the rule that the jurisdiction of a court is conferred by the Constitution and by the laws in force at the time of the commencement of the action. 25 Under the amendatory provisions of Republic Act 7691, which is the law in force at the time Dela Cruz filed the ejectment case, it is clearly provided that Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts have exclusive original jurisdiction over cases of forcible entry and unlawful detainer. 26 The fact that a management committee had already been created by the SEC does not divest the first level courts of their exclusive jurisdiction. Under P.D. No. 902-A, the existence of an executive committee merely suspends the proceedings in civil actions.

The avowed objective of suspending all actions against a distressed corporation when a management committee or rehabilitation receiver is appointed, as enunciated by this Court in Rubberworld (Phils.) Inc. vs. NLRC 27 and in Rizal Commercial Banking Corporation vs. Intermediate Appellate Court, 28 is to enable such management committee or rehabilitation receiver to effectively exercise its powers free from any judicial or extra-judicial interference that might unduly hinder or prevent the rescue of the distressed company. However, this purpose can no longer be effectively met in the present case as the proceedings herein have already been pending for almost ten years and have already reached this Court. The management committee has been unduly burdened enough, its time and resources wasted by the proceedings that took place before the RTC and the appellate court. Hence, to decree the annulment of the previous proceedings in the lower courts will only result in further delay. The greater interest of justice demands that we now dispose of the issues raised in the present petition.

Besides, the other object of suspending all actions against a distressed corporation, which is to treat all of its creditors on equal footing, is defeated by the fact that the assailed judgment of the MeTC has already been implemented through a writ of execution issued by the court a quo as early as July 22, 1996. 29

Lastly, considering that petitioners had already been given sufficient opportunity to adduce their arguments through submission of evidence and the filing of various pleadings in the RTC, the CA, and in this Court, we deem it proper to resolve the controversy pending before us.

We now come to the main issues raised in the instant petition.

In their first assigned error, petitioners contend that the bloc of Elsa Chua through Francis Chua connived with herein respondent Romana Dela Cruz in committing extrinsic fraud against petitioners. Petitioners allege that the extrinsic fraud consisted in Francis Chua's deliberate omission to furnish the Committee and the bloc of Nancy Hao with the summons issued by the MeTC. On this basis, petitioners contend that the MeTC did not acquire jurisdiction over it; consequently, its judgment rendered in favor of Dela Cruz and against petitioners is null and void.

We are not persuaded.

The RTC found that the Committee was sufficiently apprised of the complaint for ejectment when Francis Chua's lawyer sent a letter together with a copy of said complaint on March 22, 1996, to Mr. Gregorio Navarro, Chairman of the Committee, informing him that the complaint was received on March 21, 1996, that it was filed by the lessors of the land leased by Tyson's on the ground of unpaid rentals and that Tyson's is required to file an answer within fifteen days from receipt. 30

We find no cogent reason to disturb said findings of fact.

First, the resolution of whether or not Francis Chua employed extrinsic fraud to deprive petitioners of their day in court entails determination of factual issues which is beyond the province of this Court. The resolution of factual issues is the function of trial courts whose findings on these matters are received with respect and are, as a rule, binding on this Court unless it is shown that they are grounded on speculations, surmises or conjectures. 31

Second, well-settled is the rule that factual matters cannot be inquired into by this Court in an appeal by certiorari. 32 This Court, at this stage, is limited to reviewing errors of law that may have been committed by the lower courts. 33 We are, thus, constrained from conducting further scrutiny of the findings of fact made by the trial court. 34 Otherwise, we would convert this Court into a trier of facts. 35 There are recognized exceptions to this rule, to wit: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its findings the CA went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the CA manifestly overlooked certain relevant facts not disputed by the parties, which if properly considered, would justify a different conclusion. 36 However, after a review of the instant case, we find that it does not fall under any of these exceptions.

 

Third, even granting, for the sake of argument, that the issue of extrinsic fraud as committed by Francis Chua is properly and timely raised by petitioners, we still find their contentions unavailing. HaSEcA

It is true that a final judgment may be annulled on the ground of extrinsic or collateral fraud. Extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of the trial of the case, whereby the defeated party has been prevented from exhibiting fully his side of the case, by fraud or deception practiced on him by his opponent. 37 Thus, it refers to some act or conduct of the prevailing party which has prevented the aggrieved party from having a trial or presenting his case to the court, or was used to procure judgment without a fair submission of the controversy. 38 In the present case, the fraud referred to by petitioners was allegedly committed by Francis Chua, who is the corporate secretary of Tyson's, the petitioner corporation, and a member of the management committee created by the SEC. However, Francis Chua is neither an adverse party nor the prevailing party insofar as the ejectment case against Tyson's is concerned. In fact, he is not a party to the said case. It is true that petitioners claim that Francis Chua conspired with Dela Cruz in committing extrinsic fraud against them. However, the RTC, in its resolution of September 24, 1996, already ruled that this particular allegation is not supported by evidence and we find no compelling reason to deviate from the trial court's finding.

The second issue raised in the present case is whether Tyson's was validly and effectively served with the summons issued by the MeTC.

We rule in the affirmative.

The procedural rule in effect at the time the ejectment case was filed by Dela Cruz with the MeTC is Rule 14, Section 13 of the Revised Rules of Court, to wit:

Sec. 13. Service upon private domestic corporation or partnership.— If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary, cashier, agent, or any of its directors.

In the instant case, it is established that at the time Francis Chua received the summons from the MeTC, he was the incumbent corporate secretary of Tyson's. In addition, he was a member of the management committee created by the SEC to oversee the operations of Tyson's. Being a member of the Committee, there is no question that he was an agent of petitioner corporation as contemplated under then Section 13, Rule 14 of the Revised Rules of Court. Hence, whether he was acting in his capacity as corporate secretary or as an agent of Tyson's, or both, when he received the summons from the MeTC, the service of said summons upon him is valid.

Petitioners contend that under procedural law, the service of summons to a corporation must be made to a responsible officer authorized to receive the same on behalf of the corporation. In addition, petitioners posit that since the management committee has already taken over the functions of the board of directors of Tyson's, it is the only body which could receive summons. Based on these premises, petitioners conclude that it is the chairman of the management committee who is authorized to receive summons, as he is the "responsible officer" being referred to by the rules of procedure, the officers and directors of Tyson's having ceased to hold office.

We are not persuaded. Petitioners' line of reasoning is flawed. The management committee created by the SEC is composed of the accounting firm of Punong Bayan and Araullo represented by petitioner Gregorio S. Navarro as the chairman, with Nancy Hao and Francis Chua as members. Hence, even if we are to follow petitioners' premise that the Committee is the only body authorized to receive summons, we still find no basis to conclude that only its chairman is authorized to receive summons. Like the chairman of the Committee, its members are also authorized to receive summons since they are also considered "responsible officers" as contemplated by the Rules of Court in effect at the time the ejectment case against Tyson's was filed. In the present case, since it is not disputed that Francis Chua is a member of the management committee, he is therefore authorized to receive summons for and in behalf of Tyson's.

Furthermore, we agree with the pronouncement of the CA in its assailed decision that nothing in the order of the SEC creating the management committee nor in the language of P.D. No. 902-A, provides that only the chairman of the Committee is authorized to receive summons. We likewise agree with the CA that even if the SEC or the Committee has adopted a rule to the effect that only the chairman of the latter may receive summons, such rule cannot amend or alter the Rules of Court promulgated by the Supreme Court, pursuant to Section 5(5), Article VIII of the Constitution, which allows officers of a corporation to receive summons on its behalf.

Based on the foregoing, we find that the CA did not commit any error or grave abuse of discretion in ruling that summons was validly served upon Tyson's, as a consequence of which, the MeTC acquired jurisdiction over the person of petitioner corporation. acITSD

WHEREFORE, the petition is DENIED and the Amended Decision of the Court of Appeals in CA-G.R. SP No. 41970 dated May 20, 1999 is AFFIRMED.

SO ORDERED.

Puno, Callejo, Sr.,Tinga and Chico-Nazario, JJ., concur.

 

Footnotes

1. Penned by then Associate Justice Romeo A. Brawner (now Presiding Justice) and concurred in by Justices Angelina Sandoval-Gutierrez (now a member of this Court) and Martin S. Villarama, Jr.

2. Penned by Justice Emeterio C. Cui and concurred in by Justices Lourdes K. Tayao-Jaguros and Romeo A. Brawner.

3. Exhibit "F," RTC Records, pp. 72-75.

4. Ibid.

5. RTC Records, pp. 40-41.

6. Exhibit "8," RTC Records, p. 123.

7. Exhibit "M," "7," RTC Records, p. 122.

8. Exhibit "Q," RTC Records, pp. 194-197.

9. Exhibit "6," RTC Records, pp. 120-121.

10. Exhibit "Y," RTC Records, pp. 212-214.

11. RTC Records, p. 38.

12. Id.,p. 2.

13. Id.,p. 78.

14. Id.,pp. 235-237.

15. Id.,pp. 248-253.

16. CA Rollo,pp. 1-68.

17. Id.,p. 413.

18. Id.,pp. 411-412.

19. Id.,p. 415.

20. Id.,p. 1044.

21. Id.,pp. 1046-1047.

22. Id.,pp. 1058-1071.

23. Id.,p. 1077.

24. Rollo,p. 33.

25. Vesagas vs. Court of Appeals,371 SCRA 508, 517-518 (2001).

26. Rivera vs. Santiago,410 SCRA 113, 120 (2003).

27. 305 SCRA 721 (1999).

28. 320 SCRA 279 (1999).

29. Rollo,p. 89, Petition; p. 416, Comment of private respondent.

30. Exhibit "9," RTC Records, p. 124.

31. Engreso vs. De La Cruz,401 SCRA 217, 220 (2003).

32. Chan Sui Bi vs. Court of Appeals,341 SCRA 364, 372 (2000).

33. Alvarez vs. Court of Appeals,408 SCRA 419, 429 (2003).

34. Ibid.

35. Ibid.

36. Madrigal vs. Court of Appeals,G.R. No. 142944, April 15, 2005, citing The Insular Life Assurance Company, Ltd. vs. Court of Appeals,428 SCRA 79, 86 (2004).

37. Macabingkil vs. People's Homesite and Housing Corporation,72 SCRA 326, 344 (1976).

38. Salonga vs. Court of Appeals,269 SCRA 534, 544 (1997).